Jersey Opens New GST Consultations

by Jason Gorringe, Tax-News.com, London

08 August 2007

Comments are being invited by the States of Jersey on whether certain services should be exempt from the new Good and Services Tax (GST).

A four week consultation period opened on August 6 into the technical and operational issues surrounding the implementation of GST next spring.

The consultation is aimed primarily at larger business that will have to register for GST. The regulations contain clauses which specify what records must be kept, and a requirement for businesses to inform customers as to whether or not prices include GST. They also include new exemptions for funeral services and approved childcare, as well as GST relief for charities and special concessions for second-hand cars.

This is the latest in a series of consultations on GST that the States of Jersey has conducted over the past three years.

The GST legislation is part of a package of measures which will fundamentally reform Jersey’s tax structure which came about in response to the plan to move to a zero/ten system of corporate taxation. The objective of this reform package is to maintain Jersey’s high standard of living and buoyant economy, by ensuring that the Island’s financial services sector maintains its competitive position in this profitable global industry.

In a report commissioned by Jersey’s Chamber of Commerce, published last month, Economic Adviser to the British Chamber of Commerce David Kern expressed strong support for Jersey's future taxation strategy. He suggested that introducing GST and reducing corporate tax are the correct strategic responses if Jersey is to safeguard its key industry - financial services. He stressed the importance of continuing to support the finance sector, since this will in future continue to be Jersey’s main wealth creator.

The former Chief Economist to NatWest maintained that the focus on GST as the main tax aimed at closing the fiscal hole created by the 0/10 framework is correct, since there are good economic arguments for taxing consumption, rather than income or profits.

The States of Jersey will introduce GST in Jersey next spring at a rate of 3%. It is estimated this will bring in GBP45 million to fund public services.

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